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According to the Third Circuit U.S. Court of Appeals, a claim arising under a contract with no arbitration clause may still be arbitrated if the claim’s underlying allegations “touch matters” covered by a separate arbitration agreement.
In In re NBR Antitrust Litigation v. Crompton Corp.; Uniroyal Chemical Co., Inc., No. 05-4535, 2006 WL 3147328 (3d Cir. Nov. 2, 2006), a plaintiff class alleged price fixing by manufacturers of a synthetic rubber product. ParaTec, one of the co-defendants, filed a cross-claim against Uniroyal and Crompton for indemnification. Although the Limited Liability Agreement (LLA) contained no arbitration clause, Uniroyal and Crompton argued that ParaTec’s claims were arbitrable, since the LLA incorporated provisions of a Joint Venture Agreement (JVA) that contained an arbitration provision. The lower court held that ParaTec’s claims were not arbitrable.
The Third Circuit reversed the lower court and held that the indemnification claims could be arbitrated. ParaTec sought indemnification under the LLA, but its claim could only succeed by demonstrating a breach of related agreements that did call for arbitration of disputes. Since the underlying allegations “touch matters” covered by an arbitration clause, ParaTec’s claim was also suitable for arbitration. Brayman Constr. Corp. v. Home Ins. Co., 319 F.3d 622, 626 (3d Cir. 2003).
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